A 2nd wave of COVID-19 infections poses the biggest threat to the US economy this year, economist survey shows
- The National Association for Business Economics' June Outlook released Monday showed that 87% of economists surveyed said a second wave of COVID-19 is the top risk for the economy going forward.
- In addition, 80% of economists surveyed think that the balance of risks to economic growth in 2020 are weighed to the downside.
- The NABE panel also expects US gross domestic product growth to fall 5.9% in 2020, the sharpest annual decline in economic output since World War II.
Even as the US reopens from sweeping lockdowns to contain the spread of coronavirus, economists worry about what a second wave of the illness would do to the economy.
Tha National Association for Business Economics June Outlook survey released Monday showed that 87% of economists said a second wave of COVID-19 infections is the top risk for the US economy this year. In addition, 80% of the 48 panelists said that risks to the outlook are tilted to the downside, the survey showed.
In just a few months, more than 100,000 Americans have died from COVID-19. In addition, it's wreaked havoc on the labor market — more than 40 million Americans have applied for unemployment insurance as layoffs persist, and US employers erased a record 20.7 million jobs in April.
Since, the economy appears to have rebounded slightly. The May jobs report Friday showed that the US added 2.5 million jobs in the month, and the unemployment rate declined to 13.3% from 14.7% a month earlier.
Still, rushing to reopen could increase chances of a second wave of COVID-19 and lead to another lockdown, which would have further devastating affects on the economy.
For the entire year, NABE economists expect that US gross domestic product will slump 5.9%, the sharpest annual decline in economic output since World War II. The revised GDP slump of 5% from January to March is expected to be followed by a record 33.5% plunge in the second quarter of this year, reflecting the worst months of the coronavirus pandemic, according to the survey.
The NABE panel then sees GDP recovering in the second half of the year and beyond, jumping 9.1% in the third quarter and 6.8% at the end of the year. A majority of economists surveyed do not expect US GDP to recover to pre-coronavirus recession levels until at least the second half of 2021.
On the flip side, 51% of economists surveyed said that a vaccine for COVID-19 presents the biggest upside to the US economy, while 29% said that the best upside is that a policy of testing and tracing slows the coronavirus outbreak for the reopening.